Case Study: A FMCG Media Agency Contract and Remuneration Assessment

This post is by David Angell, TrinityP3 General Manager and Head of Media. David has extensive commercial and media experience gained through a fifteen year career in media agencies, which he uses to help drive optimal results for TrinityP3 clients.

Client Category – FMCG

Challenging Problem:

The procurement team of a large organisation in the FMCG sector had recently initiated an internal evaluation of the incumbent media agency, from a financial perspective.

The media agency handled a number of significant brands across the business, and had recently submitted a revised fee and structure proposal for consideration.

Media agency contract and remuneration assessment

To conduct a robust evaluation, a number of hurdles had to be overcome:

  • Long history with the incumbent, resulting in aging contractual documentation
  • Fluctuation in scope and requirements between initial contract signing and the present day
  • Lack of direct media agency experience within the procurement or marketing team that enabled a truly objective evaluation to occur
  • A sense of ‘not knowing what to look for’ in the evermore complex world of media agencies, particularly in light of recent news articles and opinion pieces explaining the problem of ‘lack of transparency’ across media agencies in general.

Solution:

TrinityP3 conducted a Contract and Remuneration Assessment focused specifically on the incumbent media agency.

Process:

In order to provide the review of the market, TrinityP3 used the following process:

  • Interviewed client stakeholders to ensure a holistic understanding of the current situation.
  • Gathered a comprehensive set of data points, including current contract, new fee proposal, addendums detailing historical additions to scope, rate-cards detailing diversified revenue streams/non-scope charges, twelve months of media planning and buying work, current plans for the next 12 month period.
  • Conducted a detailed assessment of all data points, including contract inclusions and structure, resource structure and levels, and comprehensive financial benchmarking using our industry pool.
  • Structured, presented and discussed a written report demonstrating our findings and key recommendations against which the client could achieve short, medium and longer term value gains calibrated to improve agency and marketing performance in terms of efficiency and effectiveness.
  • Our consultant team was led by a media agency expert with fifteen years of media agency experience, and a financial expert with over ten years of financial experience, including CFO roles within agencies.

Timeline:

The project was completed within a three week period from commencement.

Result and feedback:

Our recommendations enabled the client to enforce two immediate cost reductions, which between them delivered a saving more than double the cost of our assessment (to be precise, a 128% return on investment). This return was achieved before any significant negotiation took place – for which the client had a raft of other recommendations to use in negotiation!

As with all such projects, TrinityP3 aims for a mutually equitable outcome for both client and agency, which is commensurate with reasonable market demand and which increased performance. In executing this project, we provided the client with all necessary armament to make this goal a reality.

For more information on our Media Transparency, Performance and Value Assessment, click here

About David Angell

David has been a media agency practitioner for fifteen years, holding several senior positions in the UK and Australia. During this time, he has worked with a number of blue-chip organisations. David is the General Manager and Head of Media at TrinityP3. He lives in Melbourne with his wife and children.

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